Ex-Ante Margin Squeeze Tests in the Telecommunications Industry: What Is a Reasonably Efficient Operator?

31 Pages Posted: 21 Dec 2012 Last revised: 13 Aug 2013

Germain Gaudin

European Commission - Directorate General for Competition; Heinrich Heine University Dusseldorf - Duesseldorf Institute for Competition Economics (DICE)

Claudia Saavedra

Regulatory Affairs - Orange

Date Written: August1 13, 2013

Abstract

We study the implementation of 'reasonably efficient operator' margin squeeze tests by National Regulatory Authorities in European telecommunications markets. We provide a theoretical framework in which we show how regulatory authorities deal with the asymmetries between entrants and incumbents by adjusting the 'equally efficient operator' margin squeeze test used in competition policy. Using this framework, we build a benchmark of implementation choices by inspecting authorities' guidelines, market analyses and decisions. We find that some implementation choices are very similar across authorities' decisions, whereas some others display a strong heterogeneity.

Keywords: Margin squeeze, Imputation test, Regulation, Telecommunications

JEL Classification: L51, L96

Suggested Citation

Gaudin, Germain and Saavedra, Claudia, Ex-Ante Margin Squeeze Tests in the Telecommunications Industry: What Is a Reasonably Efficient Operator? (August1 13, 2013). Available at SSRN: https://ssrn.com/abstract=2192212 or http://dx.doi.org/10.2139/ssrn.2192212

Germain Gaudin (Contact Author)

European Commission - Directorate General for Competition ( email )

Place Madou, Madouplein 1
Saint-Josse-ten-Noode/Sint-Joost-ten-Noode
Brussels, B-1049
Belgium

Heinrich Heine University Dusseldorf - Duesseldorf Institute for Competition Economics (DICE) ( email )

Universitaetsstr. 1
Duesseldorf, NRW 40225
Germany

HOME PAGE: http://sites.google.com/site/germaingaudin

Claudia Saavedra Valenzuela

Regulatory Affairs - Orange ( email )

78 rue Olivier de Serres
Paris, 75015
France

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